NAIFA Works with Treasury on Implementation of Trump Accounts

NAIFA is working with the Treasury Department on ways to promote elections to create the section 530A/Trump Accounts for Children through the assistance of financial professionals.

On February 24^, NAIFA President Christopher Gandy, along with NAIFA’s Government Relations team, met with Treasury staff to discuss the implementation and rollout of the Trump Accounts, newly established tax-deferred investment accounts for children under age 18, created in the tax law enacted last summer.

NAIFA provided Treasury with an overview of NAIFA and the clients served by its members. The group then discussed NAIFA’s comment letter submitted to Treasury regarding implementation of the Trump Accounts and the role of financial advisors. NAIFA President Christopher Gandy provided an overview of how financial advisors can help manage and grow these accounts.

Treasury appeared to agree with NAIFA’s position that the Trump Accounts should not be subject to ERISA requirements. Treasury is also interested in NAIFA’s support during the rollout of these accounts.

Key Points from Treasury

Implementation

• Treasury staff emphasized that the rollout and success of the Trump Accounts is a high priority for the administration. Their goal is to enroll as many eligible children as possible — potentially nearly 70 million.
• Treasury has sought to make opening the accounts simple, including introducing a one-page Form 4547 to elect to open an account and receive the initial $1,000 pilot program contribution. Treasury estimates that more than 1 million children have already enrolled.

Role of Financial Advisors

• Gandy explained how financial advisors can advise on Trump Accounts, illustrating the long-term value when annual contributions are made.
• Gandy also referenced the history of 529 accounts, noting that uptake increased when awareness grew and when accounts were modified to allow tax-free withdrawals for qualified expenses. He suggested that the Trump Accounts could follow a similar trajectory.
• NAIFA described our upcoming financial literacy events with Members of Congress.

Employers and Trump Accounts

• Treasury staff reported that many large employers have committed to funding Trump Accounts as an employee benefit, they intend to promote.
• NAIFA noted that our members advise many small businesses and could help disseminate information about Trump Accounts during rollout. Gandy added that as clients become aware of this benefit, they may begin asking employers to offer it.

NAIFA will continue working with Treasury as the program rollout continues.

Prospects: The section 530A/Trump Accounts for Children program shows early signs of success in terms of enrollment, at least initially during the program’s pilot program years when the government seeds each account with a $1000 contribution. However, access to account funds, who and how can hold the accounts (financial institutions) and other important details on how the program will work have not yet been released, and those details could influence just how widespread the takeup on the program will be once it is fully implemented.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.